The Federal Housing Administration, or FHA, is a government-run organization that provides loans to borrowers with low-to-moderate incomes. This program is a popular choice for first-time homebuyers, and it could be beneficial for those who don’t have a lot of money saved up for a down payment. Here’s what you need to know about FHA loan down payment rules for 2019.
First, let’s look at the minimum down payment required for an FHA loan. The minimum amount required by the FHA is 3.5% of the purchase price of the home. For example, if you are buying a $100,000 home, then your minimum down payment would be $3,500. However, some lenders may require a higher down payment, meaning that you might have to put more money down in order to qualify for a loan.
In addition to the down payment, the FHA also offers some other options for those who don’t have enough money saved up to make the full 3.5%. For example, the FHA allows you to use gifts or grants from family members, employers, charities, and certain housing assistance programs. The FHA also allows you to take advantage of seller concessions and state and local down payment assistance programs.
In general, the FHA requires that all borrowers have a steady income and a good credit history. The FHA also requires that borrowers have adequate reserves on hand, which means having enough money saved up to cover at least three months of mortgage payments. This helps ensure that borrowers are able to make their payments in case of any unexpected financial difficulties.
Finally, the FHA also requires that borrowers pay a mortgage insurance premium for the life of the loan. This payment is usually 1.75% of the total loan amount and is paid as part of the monthly mortgage payment.
Overall, the FHA loan down payment rules for 2019 are designed to make the process of getting an FHA loan easier and more affordable. With the options of using a gift or grant, seller concessions, and state and local down payment assistance programs, many people can qualify for an FHA loan even if they don’t have a lot of money saved up for a down payment.
The Federal Housing Administration (FHA) provides loans to borrowers with low-to-moderate incomes as a government-run organization. It is popular among first-time homebuyers and benefits those who do not have the necessary funds for a down payment. The minimum down payment for an FHA loan is 3.5% of the purchase price of the home. This may be higher when lenders have specific requirements. To make up for the 3.5%, FHA offers various other options such as gifts or grants from family members, employers, charities, government housing assistance, and seller concessions.
To qualify for the loan, people must have a steady income and good credit history, and sufficient reserves on hand, which is equal to three months of mortgage payments. Mortgage insurance is also mandatory and these payments are usually 1.75% of the loan amount and are included in the monthly mortgage payment.
These rules are in place to make the loan process easier and more affordable while giving people more options to get an FHA loan. As long as borrowers meet the criteria, FHA loans provide an attractive option for those who don't have much saved for a down payment.
This article was contributed on Oct 22, 2023
